Can Incentive Be Part Of Assured Salary

HI
For a promotion case can we deducted x amount from assured pay and showed as increased incentive for new role, is this correct a practice.

YAGS06
If it is part of your employment contract i.e CTC. In such case it is part of salary.
R D Watve

CTC says that this is apart from assured pay, coming under earning potential.
When we joined this organization we were hired on assured pay only, over a period of time system changed and started paying incentives on good performance, that has been always apart from your basic, HRA, statutory bonus, FBP etc.
Now question is that can a company take a part from your assured pay and shows as increment in incentives. For this they even asking to sign a consent letter.

Dear Yags06

Let us understand the different terms & definitions here:

1. Promotion – A promotion indicates an upward movement in a grade and salary structure due to increase in job scope. E.g. Technician to Senior Technician.

2. Assured pay – Also known as Base pay is a guaranteed pay to reward the jobholder for the expected job scope. E.g. Technician is paid S$1200 while Senior Technician with larger job scope is paid S$2000. Base pay is job-scope driven.

3. Incentive – An incentive is variable pay and is link to performance or improved performance. E.g. increased in productivity leads to a productivity incentive payout. Incentive is not a component of Base pay. But the summation of Base pay and incentive and other performance-linked variables will derive Total Cash or CTC, which is your earning potential.

To answer your question:

x amount from Base pay CANNOT be deducted to show increased in incentive in a promotion because even though you have been promoted to do a bigger job, your guaranteed pay has just been reduced and you have to earn it back by meeting a bigger productivity quota.

This is an unlawful practice and you should not sign on any document until all your concerns are addressed by your HR.

Regards

Autumn Jane

Incentive is non-committed CTC as it varies depending upon the performance of the individual.

Thanks Autumn Jane
one catch is that for a period of 3 months new role is under training period and during this period.
On one side they are not increasing the salary structure(upgraded) for the training period and on the other hand want to increase the incentive by deducting from base salary.
Now do we have to add on something in previous statement or still we have genuine concern.

Dear Yags06

Annual Increment, Promotion Increment and Incentive are part of Salary Administration.

Different organizations may have different policy and procedures, but in general, these are a few options:

1. A promotion can only take place when said employees has consistently over a period of time (usually 2-3 years) not only meets but exceed expectations.

2. Opton 1 - promoted employee received promotion letter detailing new job scopes, new grade and new salary range with effective date. Effective date can be with immediate effect or back-pay depending on the arrangement between employee and company.

3. Option 2 - promoted employee needs to go through training or "probation" to be competent may continue to receive existing salary and get back-pay.

4. Option 3 - promoted employee received an "acting" allowance in addition to the existing salary during training and this allowance can be taken away if the promotion did not materialize or be formally given as an increase in base pay if promotion takes place. In this instance, communication is key.

Whatever option, no cutting of base salary is allowed if it is a clear case of promotion.

Regards

Autumn Jane